About Our 457(b) Deferred Compensation Plan
Overview
This is a voluntary retirement plan offered to City of Tacoma employees created to allow you to put aside money from each paycheck towards retirement. Contributions are made to the account in your name via payroll deduction for the exclusive benefit of you and your beneficiaries. The value of the account is based on your contributions, your investment choices, and your investment performance over time.
A deferred compensation plan can help bridge the gap between what you have in your pension and Social Security, and how much you'll need in retirement. Depending on your plan, your contributions may be pre-tax (Traditional Plan) or post-tax (Roth).
Your pre-tax contributions reduce your taxable income for the year. These contributions and all associated earnings are subsequently not subject to Federal tax until you withdraw them. There is also a Roth option which may allow for tax-free withdrawals. Please consult your personal financial advisor or the Deferred Compensation representative listed below for more information on the tax implications of each plan.
You may choose to contribute to both the Traditional and Roth plans, however, the annual contribution limit for the Traditional and Roth combined must adhere to the IRS annual maximum limits listed below.
Enrolling and Making Deferral Changes
Deferral increases, decreases, as well as new enrollments must be made using your vendor portal (links to each vendor and instructions are below). These changes will take effect immediately. All changes for a given pay date, must be made no later than midnight the Sunday before the upcoming pay date.
Instructions for online enrollment and changes for MissionSquare
Instructions for online enrollment and changes for Local 31 only
Investing
You are able to directly control how your account is invested via your online MissionSquare (All Employees) or Nationwide (Local 31 members only) portal with the vendor. You may choose from a wide range of options. Please note that our staff is unable to provide investment advice. Contact the vendor representative or your personal financial advisor for assistance with this.
Beneficiaries
You designate a beneficiary, or beneficiaries, through your Deferred Compensation vendor portal, who will receive any remaining assets upon your death. Designating beneficiaries can help ensure your assets are paid per your wishes, avoid the potential costs and delays of probate, and allow non-spouse beneficiaries to receive additional tax benefits.
Withdrawals
You can make withdrawals from your account when you leave employment with the City and have the option to receive payments as needed, or request scheduled automatic payments. You maintain control over your investments and continue to benefit from tax deferral and the City’s low fees even after you separate from employment.
During employment, subject to the City’s plan and IRS rules, you may also be able to make withdrawals after age 70½ or due to an unforeseeable emergency. A loan option for the funds you've contributed is also available through the vendor portal and has no age restrictions.
Withdrawals are generally taxable but, unlike other retirement accounts, the 10% penalty tax does not apply to distributions prior to age 59½ (the penalty tax may apply to distributions of assets that were transferred to the 457 plan from other types of retirement accounts)
2024 Deferred Compensation Limits
Employee Contribution Limits (Except Commissioned Police and Fire)
Employee Contribution Limits (Police Local 6 Only)
Employee Contribution Limits (Police Local 26 Only)
Employee Contribution Limits (Fire Local 31 Only)
Employee Contribution Limits (PPSMA Only)
Vendor Contacts and Information
If you have any questions, please contact the Benefits Office at 253-573-2345 or benefits@cityoftacoma.org or the account representative listed above.